Wednesday, 2 March 2011

Cambodia: no longer on the frontier?

For those who want a bit of exotica in their portfolio, the world of frontier markets is getting a little broader. Hot on the heels of the newly opened Laos exchange, Cambodia is getting in on the act. Maybe.

After years of on-again off-again negotiations, the Cambodian government has finally licensed the new Phnom Penh exchange, a joint venture with the Korea Stock Exchange, which owns 45 per cent.

But as those who have followed the saga of the exchange will know, other deadlines have come and gone with little movement. It was originally scheduled to open in 2009 but fell foul of the financial crisis. Then it was supposed to open at the end of last year, but still no luck.

The new date is July, but even Hong Sok Hour, the normally ebullient head of the new exchange, was sounding doubtful in the Phnom Penh Post.

He told the paper:

We are optimistic about the opening of the securities market in Cambodia, but we are not sure whether it will be successful or not as we don’t have all the components in place yet.

The new $6m dedicated building at the in South Korean-funded Camko Project on the outskirts of Phnom Penh is not yet finished, and the exchange will initially open on two floors of the Canadia Tower, the city’s only skyscraper.

The first listings are expected to be state-owned: the talk around town mentions Telecom Cambodia, the Phnom Penh Water Supply Company, and Sihanoukville Autonomous Ports. No private enterprises have yet come forward publicly to express interest, but some banks and a number of subsidiaries of the country’s diversified conglomerates say they will be watching closely.

The Korean exchange has been at the forefront of opening up south-east Asia’s last frontiers. It provided technical assistance 10 years ago when Vietnam established the Ho Chi Minh stock exchange, although it did not take an equity investment, and more recently it was instrumental in setting up the Laotian exchange, in which it took a 49 per cent stake, and has even expressed an interest opening up Burma.